This week we learned everything Donald Trump thinks about China and trade is wrong

Donald Trump has said it a million times. China is a currency manipulator, winning a trade war with the United States by artificially lowering its currency, the yuan, to flood our country with exports.

It sounds like something a nationalist, protectionist, and isolationist would say. And that’s fine if you’re into that kind of thing.

But it’s completely and totally wrong, and the data we’ve seen come out of China confirms that.

The Chinese economy of 2016 is far more complex than the picture Trump paints. It’s an economy facing difficult, sometimes contradictory choices with no easy solutions.

Lets get to the data and Trump’s charges and compare them so you see what I’m talking about.

Donald says China is a currency manipulator

According to Trump, China is artificially suppressing the value of its currency, the yuan.

And it’s true that the yuan is hitting six-year lows this week. But it’s not because the government is trying to keep the currency cheap, it’s because it’s stopped supporting it.

The Chinese economy is trying to get through a really crucial transition from an economy dependent on exports and investment, to one based on consumer consumption. Without this transition, it will never be a self-sufficient economy (like the US), but to do this, its people need purchasing power. They need a strong yuan to buy goods.

And China’s yuan was just added to the Special Drawing Rights (SDR) basket. This is an elite group of global reserve currencies that basically show your country has a stable, working economy. It’s a sign that China has joined the big boys, which is something country’s leaders desperately want.

But money is flowing out of China as the economy slows during this difficult transition. Goldman Sachs actually thinks that more money is flowing out than the country is willing to admit. That in itself is depressing the yuan.

I had a great Twitter conversation with Patrick Chovanec, a Managing Director and Chief Strategist at Silvercrest Asset Management and former professor at Tsinghua University in Beijing about this earlier this week. The whole thing is worth a read, but in a nutshell, Chonavec said that China needs a strong currency to maintain quality of life right now.

In fact, it’s unclear why the Chinese aren’t still propping the currency up because:

12. But it might lead people to think more depreciation is coming, encouraging more capital outflows and making the downward pressure worse.
— Patrick Chovanec (@prchovanec) October 11, 2016

So suppressing the currency isn’t really worthy it to China right now. We know that last tweet is accurate because of more trade data that came out on Thursday.

Donald says China is winning a trade war against the US

In September Chinese exports came in low — the lowest in 7 months, and down 10% from this time last year — despite its weakening currency.

“… the numbers cut against the view that stronger competitiveness from a weaker yuan and more demand as U.S. households strengthen will return overseas sales to a growth path,” said Bloomberg economist Tom Orlik in a note published after the print. “The yuan has weakened 0.8% so far in October. Shrinking exports will add to fears it has further to fall… The [trade] surplus in dollar terms was $42 billion, down from $52.1 billion. The narrower trade surplus helps explain the larger-than-expected $18.8 billion decline in China’s foreign reserves in September.”

In other words, that is not a country that is winning a trade war with anyone. It’s a country struggling to fight a battle with itself.

And that’s the thing with modern Chinese economics. It’s no longer sufficient to look at the country in contrast with the United States because it’s not just about us anymore. The Chinese economy is big, important and delicate enough that its needs and issues have to be looked at in isolation — China first, then the world.

You can imagine why this would be a difficult concept for the Donald to grasp.

This is an editorial. The opinions and conclusions expressed above are those of the author.